Feedback from accounts receivable management industry stakeholders has influenced the bill’s progress. Nevada and Texas also recently advanced bills on medical debt and credit repair. Editor’s note: This article is available for members only.
5/4/2021 15:00
ACA International members’ input on a Colorado student loan servicing bill helped the bill advance out of committee with several amendments.
The Colorado Senate Finance Committee reviewed the bill, the Colorado Student Loan Equity Act, during an April 21 hearing.
The Colorado Student Loan Equity Act would expand the existing Colorado Student Loan Servicers Act, which applies only to persons who service student loans, by adding a section covering private lenders, creditors and collection agencies in connection with those student education loans that are not made, insured or guaranteed under federal law and that are used for postsecondary education, ACA previously reported.
The state’s Senate Finance Committee advanced the bill with nine amendments and a favorable recommendation to the Colorado Senate Appropriations Committee.
ACA members testified on the bill during the April 21 hearing following a campaign to get input from members with creditor clients working in the private student loan space in Colorado.
“That show of force had a major impact, but there is still work to be done,” said ACA’s Vice President of State Unit and Government Affairs Andrew Madden. “Up until this point, the bill’s sponsors did not want to amend the legislation. This is all part of the process to make the legislation better for the accounts receivable management (ARM) industry. Kudos to our members who could get their clients to weigh in.” Madden added that it is critical to have these and more creditor clients weigh in with the Appropriations Committee. There is still an opportunity to significantly improve the legislation.
The student loan servicing bill, sponsored by State Sens. Faith Winter and Julie Gonzales, would also:
- Require lenders to grant a release to cosigners if certain conditions are met, including 12 months of consecutive, on-time payments, and to ensure that cosigners have access to all documentation and records related to the loan they have cosigned;
- Expand disability discharge requirements so that a borrower or cosigner may be released from repayment obligations if permanently disabled;
- Prohibit “robo-signing” of documents used in collection lawsuits and require specific evidence of loan origination and chain of ownership of the debt before a loan creditor or collection agency may commence legal proceedings;
- Prohibit auto-defaults, in which a loan is declared immediately due and payable upon the death or bankruptcy of a cosigner even when there has been no default in payments; and
- Provide legal recourse for borrowers who are harmed by predatory acts and practices of a lender, creditor or collection agency. A violation of the new part of the bill is defined as a deceptive trade practice under the “Colorado Consumer Protection Act.”
The bill will next be considered by the Colorado Senate Committee on Appropriations.
Nevada Medical Debt Bill
In other state news, ACA members recently testified before the Nevada Assembly Committee on Commerce and Labor in opposition to an amended version of S.B. 248, which revises provisions of state law related to the collection of medical debt.
The bill, which passed in the Nevada Senate 19-2 April 12, requires a collection agency to notify a consumer before taking any action to collect a medical debt and prohibits certain practices relating to the collection of medical debt, ACA previously reported.
A two-part amendment to the bill presented April 23 is intended to clarify potentially confusing language identified by stakeholders and, at the request of stakeholders, “that medical debt may be pursued for collection in justice court in a small claims action if it falls within the jurisdictional limit.”
Madden said the fact that the committee accepted the amendment is a good start, but there is a lot of work to be done on this legislation.
Texas Credit Repair Bill
Texas State Rep. Hugh Shine, R-Temple, recently introduced an industry supported bill, H.B. 4266, to amend the state’s finance code and add requirements for credit repair service organizations.
It was passed by the state’s committee on Pensions, Investments and Financial Services with bipartisan support in late March and sent to the House Calendars Committee. The calendars committee is still reviewing the legislation.
ACA continues to monitor state bills that would impact the ARM industry if enacted, and members can hear updates on state and federal legislation on the weekly ACA Huddle sponsored by Connect International, Solutions by Text and Pay N Seconds.
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